Real-Time With Frank Addante: Rubicon Chief Says He's A Suitor, Not A Seller

On Tuesday, the Rubicon
Project announced two strategic hires, bringing Mediaplex Founder & CEO Greg Raifman in as president and founding Overture CFO Todd Tappin in as COO & CFO, and giving Rubicon founder-CEO Frank
Addante some much-needed bench strength. While the reorg comes amid rumors that Rubicon is a takeover target, in the following Q&A Addante makes the case that it will be a suitor, not a seller, as
its steps up its own M&A efforts to accelerate growth and diversify and broaden its portfolio.

RTM Daily: So what do these hires mean for the future
of the Rubicon Project?

Frank Addante: It means that we’re continuing to grow. We’ve been profitable for a while and our revenue growth rate
has been tremendous. We have now expanded to five different countries. We are No. 1 on comScore in terms of reach, passing Google there. We have the largest installed base in terms of publishers using
our technology. And now, every major trading desk is plugging into our platform and over 100,000 advertisers are using us.

RTM Daily: So what does the
new team bring to that equation?

Addante: Some more horsepower. And in terms of specific skills, Greg [Raifman] is someone I’ve known for 14
years, and he has a deep understanding of the buy-side of the market. Thirteen years ago, he and his team [at Mediaplex] developed a technology called adXML to enable what we would probably call RTB
today. That was 13 years ago.

RTM Daily: So what do you plan to do with those buy-side chops? Will you be shifting more to a demand-side model?

Addante: It really just reinforces our original mission statement, which is to automate the buy and sell of online advertising. We’ve been called a
sell-side platform, but we’ve never referred to ourselves that way. Our strategy is to develop solutions for the publishers through all of their sales channels. Their direct sales channels.
Their indirect sales channels, like ad networks. And their automated ones, like RTB. We have lots of products for the sales side, and we develop user interfaces and APIs for the buy side. The trading
desks of done it, and the result is that we have 100,000 advertisers using our platform now. But I don’t want to confuse us with a [demand-side platform] strategy. A DSP is there to service the
advertiser and help them optimize their campaigns. Our strategy is to bring the buyer and the seller together. The sellers can use whatever channels they want, and the buyers can use whatever channels
they want. But in order for us to service the publishers, we have to service the advertisers and give them better access to the channels the publishers are using. Think of us as “Intel
inside.”

RTM Daily: What else does the new team signal for Rubicon’s future?

Addante: We’re going to continue to be
aggressive in [mergers and acquisitions]. We already have been, but we plan to be even more aggressive, and Todd [Tappin], in particular, has a lot of M&A experience from Overture. He’s also
been in private equity and has a lot of experience managing M&As. M&A is both art and science. It’s not just doing the deal, it’s making them work. At Overture, he grew them from
zero to over $1 billion in revenues. Todd brings us that experience.

RTM Daily: So this means you’re going to be the acquirer, not the acquisition
target?

Addante: Our business is growing incredibly fast in terms of revenue, and now in terms of profit. We have a very strong balance sheet that
continues to grow every day, and our plan is to add over 100 people this year. We’re about 250 people now, and we’ve grown our revenues three times on that same headcount base. We are
going to add 100 people organically and we want to find ways to take new leaps -- and the best way to do that is through M&A growth.

RTM Daily: What
will those new people you hire do, and what will the new companies you acquire do?

Addante: A lot of the new headcount will be in technology. We already
have well over 100 people in our technology organization. We hire engineers as fast as we can find them. That’s all around our existing product set. The M&As will help us accelerate some
things beyond that. We will probably not organically get into video. Video is probably something we will do via M&A.

RTM Daily: You mentioned what a
strong balance sheet you have, Doesn’t that make you an even more desirable takeover candidate?

Addante: There’s always rumors in our
business. That’s the one thing you can count on in this market -- that there’s no shortage of rumors. Every large player in this space is either a customer or a partner of ours, but
we’re not for sale.

RTM Daily: What about a rumored IPO?

Addante: That’s something
I’m unfortunately not allowed to comment on for regulatory reasons.

RTM Daily: What else is on Rubicon’s horizon? You mentioned your mobile
acquisition. There’s certainly a lot of activity in mobile, but it still hasn’t scaled as an advertising medium. What’s going on there?

Addante: If you look at the mobile companies that are out there, there are some that have significant revenue, but it’s like we’re back in 1998 or 1999 all over
again. Back then it was dot-coms buying from dot-coms. A lot of the mobile revenue today is app-to-app. It hasn’t penetrated the mainstream -- the top five advertisers or publishers. It’s
still very early stages there. My opinion on this is that I want to go out and figure out the right advertising model for mobile, because if you simply copy and paste what’s been done in
display, it’s not going to work. Please shoot me if that’s going to be the base for mobile. What is the right model for mobile? What is the right format? What are the right standards? How
do you create the right performance capabilities for marketers so that mobile becomes more effective for marketers than broadcast? It’s not just copying and pasting what we do in display for
mobile. But that said, we have no shortage in demand for mobile. In the fourth quarter we signed up 45 customers for our mobile platform. We have 100 total in our pipeline right now.

RTM Daily: So you’re trying to reinvent mobile?

Addante: Reinventing is actually a great word for it. We
came into the display market and reinvented it. Before we came along people were saying ad networks should go away, and that there would only be a few players. And we came in and said, “Look
this should all be automated,” and the DSP market would not exist if it weren’t for us and Google, because the DSPs would have to do a custom integration with everyone. When we approach a
market, we don’t just look at it as, “take it for what it is.” We look at is as, “What is the right way for this market to transact.” That’s where we are with
mobile. We’re thinking about the way it should be done, but it’s still in the early stages. It’s still a nascent market.